It Is Time to Make a Change! How the Outside CEO Succession Influences Newly Public Ventures' Growth

This study investigates how the outside CEO succession influences the growth of newly public ventures. There are conflicting arguments in the literature on the impact of outside CEO with some studies proposing the outside CEO has a facilitating role in firms’ development while others argue it has a disruptive effect on firms’ development. We integrate these views by arguing that the impact of the outside CEO is largely depending on the firm condition itself, in a way that when firms are experiencing a transitional stage, the outside CEO succession could make firms aware of , and more capable of dealing with the new challenges and opportunities. Based on a context of Chinese newly public ventures, we find that ventures with outside CEO succession in the initial years of going public have stronger growth, and such effect is stronger when these outside CEOs possess related knowledge and experience in managing listed firms. We further find that after the outside CEO succession, promoting executives internally and adding new senior executive roles can reduce the resistance of implementing the change and better facilitate outside CEOs’ utilization of their knowledge and experience, which strengthens the growth.